Syncro, a PSA and RMM platform developer headquartered in Seattle, WA, has released its MSP & IT Professionals Pricing Report 2023. The report, which surveyed 414 MSPs and IT professionals across the U.S., examines how MSPs are pricing the services they provide.
Andy Cormier, director of partner development at Syncro, recently offered insight on what the research reveals, and how channel pros can improve their pricing strategies.
Align Pricing with Your Geography
According to the report, MSPs charge an average of $98.94 per endpoint. Does this mean that those companies who are priced higher — or lower — are off the mark? Cormier argues that to arrive at a conclusion, MSPs must consider their location.
For example, channel pros located in densely populated regions may spend a minimal amount of time traveling to clients for onsite servicing. MSPs operating in rural areas may face a 30- to 45-minute drive time to reach their clients. Onsite service calls, therefore, may last anywhere from 60 to 90 minutes or more. “Your pricing has to take that into account,” Cormier said.
Align Pricing with Your Specialization
Andy Cormier
MSPs that specialize in certain markets — such as healthcare — should consider charging a premium.
Healthcare customers expose MSPs to more liability and require HIPAA compliance. “In no way should those endpoints be considered the same as an endpoint in a nine-to-five office full of admins with virtually zero liability,” Cormier said.
Consider Outsourcing for More Flexible Pricing
Syncro’s report found that 34% of MSPs offer four or more standard plans. Generally, these are larger companies with the infrastructure to offer things like 24/7 support.
Smaller MSPs striving to expand their pricing portfolio may consider outsourcing this level of support to an outside NOC (network operations center) or SOC (security operations center), according to Cormier. “This can potentially allow MSPs to accelerate their growth and begin to qualify a new subset of customer that they wouldn’t have been able to qualify prior.”
Rate Hikes Require a Nuanced Approach
The report also revealed that 39% of MSP revenue comes from monthly contracts. Sixty-three percent of MSPs raised their prices in the last year, and 33% of respondents increase their fees on an annual basis.
For Cormier, a rate increase shouldn’t be an all-or-nothing proposition. “Raising prices on one customer doesn’t mean you have to raise prices on all your customers,” he said.
Consider this scenario: Customer A is paying $100 per endpoint for an office of 25 machines. Customer B has 50 machines, also at $100 per endpoint. In theory, the MSP should be reaping the same profit per endpoint from both customers, but in practice this may not be the case. “If Customer A turns out to be consuming twice my technicians’ time as Customer B, I might be charging the same rate per endpoint but I’m certainly not banking the same rate per endpoint,” he said. Customer A, therefore, may be due for an increase.
Rate Hike-Related Attrition Can be Positive
Many MSPs worry that if they announce a price increase, they’ll lose customers. Cormier argues that this isn’t necessarily a bad thing.
For example, if an MSP raises its rates by 10 percent and loses one out of every 10 customers, revenue neither increases or decreases—and workload and liability go down. “That’s a win-win for me, and I’m going to take that extra time that I just earned and go off to sell additional customers, now at an increased rate,” Cormier said. “It’s really understanding the salability of an MSP’s one true asset, and I’ve always believed that that’s their time above everything else.”
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